There was a huge amount of press and follow-up to the Guardian article of the leaks. This theme is important enough to continue exploring. Anybody who has seen the Crash Course does not need any more information about Peak Oil itself.

Instead, I am most fixated on when a tipping point in global awareness about Peak Oil might occur. That's why this revelation and all the press it has been getting has been extremely interesting to me.

The first article helps to provide some more context and backing for the 'leaks,' which turn out not to have been very original leaks, since others were told this same information as early as 2007.

I am not surprised that some within the IEA have leaked this news. Rather, it is astonishing that this has not become known earlier. (See the article in the Guardian: Key oil figures were distorted by US pressure, says whistleblower.)

The article ”The Peak and Decline of World Oil and Gas Production” was published as long ago as 2003 in the scientific journal Minerals and Energy – Raw Materials Report by Kjell Aleklett and Colin C. Campbell (Volume 18, Number 1, 2003 , pp. 5-20[16].) It was the first “peer reviewed” article to discuss Peak Oil.

That article was read in 2007 by representatives of the “Global Transport Forum” of the OECD and they gave me the task of writing the report, ”Peak Oil and the Evolving Strategies of Oil Importing and Exporting Countries”. This report was one of those discussed at a round table meeting that was held in the IEA’s conference room in Paris.

At that opportunity, in November 2007, I had a number of private conversations with officers of the IEA. The revelations now reported in the Guardian were revealed to me then under the promise that I not name the source. I had earlier heard the same thing from another officer from Norway who, at the time he spoke of the pressure being applied by the USA, was working for the IEA. Since these anecdotes were not scientific evidence I never made use of the information other than as inspiration to continue our own research.

Earlier, following a suggestion by Colin Campbell, I had communicated to Sweden’s delegate at the IEA that Sweden should leave the IEA since it was deceiving the world and this would have serious consequences globally. I also asked how they could approve of something like the World Energy Outlook that was so in error. I had previously posted an analysis of World Outlook 2004 on ASPO’s homepage. In the discussion that followed it was revealed that the USA was applying pressure. The pressure was that the IEA should consider the prognoses that USA’s Energy Information Agency releases half a year earlier as guidelines for the IEA report. In connection with this I can mention that, in 2003, we received financial support from [Sweden’s] Energy Authority to begin the research that has now resulted in our publication “Peak of the Oil Age” and that Sweden’s Energy Authority also financed the first Peak Oil conference (ASPO) that we held in Uppsala in 2002.

After meeting with the Swedish delegate I have, at various times, communicated my view that Guy Caruso (who was then responsible for the EIA and its prognoses) was one of the world’s most dangerous people. Today a great deal of the responsibility for this situation rests with him. I have also asserted that I did not think that the level of competence within the IEA could be so low that all of its officers believed in what they have been presenting. What these faulty analyses will cost the world in the future is difficult to estimate but all the crisis packages that are currently in place are presumably a smaller part of that cost. In our publication ”How reasonable are oil production scenarios from public agencies?” we have shown that the IEA’s future prognoses are erroneous.

I've met Kjell, and he is every bit the solid and precise professor-type that one could wish for in a trusted source. His very presence conveys that he is neither prone to hyperbole nor given to error. He comes across as quite reserved and precise. Note what he has said here.

He heard the same information as contained in the Guardian article but two years ago. In keeping with his reserved approach, he held that information in confidence over the years.

He cannot find a way to believe the IEA accidentally got things as wrong as they did over the years. Their intellectual horsepower was too high.

Taken together this is another source of confirmation that political influences warped the reports of the IEA to present a rosier view of oil supplies than was warranted and that it's been going on for a long time.

If this were an isolated experience, we might discount it some, but it seems to be something of a tradition in the oil business. This next article is a blast from past, April 2004, and speaks for itself:

The Royal Dutch/Shell Group's oil production in Oman has been declining for years, belying the company's optimistic reports and raising doubts about a vital question in the Middle East: whether new technology can extend the life of huge but mature oil fields.

Internal company documents and technical papers show that the Yibal field, Oman's largest, began to decline rapidly in 1997. Yet Sir Philip Watts, Shell's former chairman, said in an upbeat public report in 2000 that ''major advances in drilling'' were enabling the company ''to extract more from such mature fields.''

The internal Shell documents suggest that the figure for proven oil reserves in Oman was mistakenly increased in 2000, resulting in a 40 percent overstatement.

Unfortunately, these "mistaken increases" in supply vastly outnumber any "mistaken decreases," which are rare enough that I cannot recall any. The game of talking up "major advances in drilling" is nothing new.

Given that supply and demand were thought to be perilously close to each other in 2008 (back when the economy was humming along), the political slanting of supply forecasts is a deeply troubling move.

For our purposes, it is important to consider what will happen when - not if, but when - all of the ersatz funny-money printed across the globe smacks into oil resource scarcity.

We're not the only ones wondering about that possibility anymore. On November 10th, 2009, TIME magazine put it this way:

Here's the bad news about the global recession's potentially coming to an end: the recovery could spark a massive energy crisis with increased demand for fossil fuels from China and other developing countries, tighter oil supplies and skyrocketing oil prices. And this is just in the near future. The longer-term picture looks even more daunting.

The article goes on to veer off into global warming which, truth be told, is only one of several concerns we might have about burning up our last oil, and certainly not the most immediate concern. The main concern should be that we have an economic and monetary system that are addicted to the type of exponential growth enabled by increasing quotas of oil.

Why is this our most immediate concern? Because without a functioning economy and monetary unit, I seriously doubt we'll even be able to coordinate ourselves to extract the last, distant, and technically challenging energy supplies.

Unfortunately, with the entire world stimulating away, we might not have as much time as I originally thought before the next energy shock. Check out these numbers that came out from China today. (Note: I take all numbers from China with a grain of salt):

Industrial production for the month surged 16.1% from the year-earlier period, outpacing a 15.5% increase forecast in a survey by FactSet Research, and beating September's 13.9% growth. Retail sales also climbed 16.2%, aided by consumer spending during an extended Golden Week holiday that lasted eight days this year compared with last year's seven-day break.

At a 16% growth rate, this implies that China will be doubling their industrial production every 4.3 years. I certainly don't think they can keep up that rate of expansion, but you get the idea…China is growing extremely rapidly. While we can't be sure of the actual amount of growth, it is clear that China is just as serious about keeping on a path of steady, if not explosive growth, as any western nation.

One of the cool facts to remember about doublings is that with each doubling you use up more resources that in all of the prior doublings combined. So if China's energy use doubles in 10 years it will mean that over the next ten years they will use up more energy over those ten years than in all of history.

Take the 2008 edition of World Energy Outlook, the annual report on which the entire energy industry and governments depend. It included the table also published by the Guardian today, and the version I saw had shorter intervals on the horizontal axis. What it made blindingly clear was that peak oil was somewhere in 2008/9 and that production from currently producing fields was about to drop off a cliff. Fields yet to be developed and yet to be found enabled a plateau of production and it was only "non-conventional oil" which enabled a small rise. Think tar sands of Canada, think some of the most climate polluting oil extraction methods available. Think catastrophe.

What made this little graph so devastating was that it estimated energy resources by 2030 that were woefully inadequate for the energy-hungry economies of India and China. Business as usual in oil production threatens massive conflict over sharing it.

Now, this all seemed pretty gigantic news to me but guess where the World Energy Outlook chose to put this graph? Was it in the front, was it prominently discussed in the foreword? Did it cause headlines around the world. No, no, no. It was buried deep into the report and no reference was made to it in the press conference a year ago.

While the rest of the world missed that buried graph, I had written about it and included it in a report written within a week of the release of the IEA report. It caught my eye immediately and I brought it to my readers' attention as soon as I could. That's what I do. I find things that are relevant and surface them months (if not years) ahead of the consensus.

At any rate, here it is again, and it deserves your fullest attention.

Note that the only way for the oil supply growth targets to be achieved is for a massive wedge of "oil fields yet to be developed" to come on line. It's worse than that, actually, because that phrase implies something that is not true. It implies that the oil has been discovered and merely needs to be developed. In fact, it needs both to be discovered and developed.

Why am I harping on energy again? Because it is the most important element to our lives and economy (as they are currently configured) that there is. Everything else is a derivative of ample and cheap energy. Everything.

If you are investing in commercial real estate, you need to consider the impact of oil scarcity on your cash flow models. If you live 45 minutes by car from your job, you need to consider how you'll transport yourself under a rationing program. If you have a diversified portfolio of stocks and bonds, you need to consider how they'll perform in an economy that is no longer growing - at least not the way it used to. If you have significant wealth locked in the paper world, you need to consider diversifying into making your local community more resilient while your money still has serious power to do good.

While I may be a couple of years early here, the potential impacts of the next oil shock will be quite profound, and I encourage everyone to begin acting as if Peak Oil is real and a lot closer than is widely recognized.

I am not saying we should act as if all this is written in stone and sure to happen. but I am saying that at least a portion of your thinking and your wealth strategy needs to be dedicated to the chance that it is all too real.

The signs are everywhere now, and I want to caution you that when a tipping point in awareness spreads across the globe, it will occur with startling speed.

Join the discussion

34 Comments

Something that worries me quite a bit about the peak of easy and cheap energy is the effect it may have on basic sanitation. Municipal infrastructure - water and sewer, is something we all take for granted. But this basic sanitation has been responsible for saving more human lives from infection than antibiotics and vaccines combined. While we can see the crumbling roads and bridges, the water and sewer pipes below us are out of sight and out of mind. It takes tremendous energy inputs - electricity for pumps, to produce chemicals, for tanker trucks to remove the solids from the waste water treatment plant, etc - to keep our sanitation system running. In addition, a large percentage of our physical infrastructure is coming to the end of its useful lifespan. Some of the pipes and valves are 80 or 100 years old, and either now or will soon need replacement. Manufacturing and installing these replacements takes huge amounts of energy - manufacturing the pipe, transporting it, excavating the trench, removing and disposing of the old pipe and installing the new. These basic acitivites require vast amounts of fuel. And we will soon have no choice but to undertake them as the infrastructure fails, just as we reach peak oil. The implications are troubling.

I have had those same thoughts myself. I recommend looking into two things: Biosandfilters and Humanure. Both are low tech, yet effective, requiring very little more beyond knowledge to implement them. They would probably take some getting used to, though.

At about 56:00-64:00 in the press conference, in response to questions about the Guardian article, the president of the IEA says that the article is groundless, and then goes on to admit that production from current oil reserves has peaked. Then another speaker expressed surprise because others have said the IEA's numbers are "too alarmist. Also in response to the Guardian article, the IEA is making their "2008 reference scenario" publically available. This same speaker also admits that they show this reference senario as a way to say, with current policy, “this is the way you are going and you shouldn't go this way.” He even admitted that that they don't even believe or think that this is the likely scenario, but, if this happened, then there will be climate problems. So it seems that they put this kind of material out in order to drive policy changes in climate change or maybe energy security.

So, if you believe that global warming is due to man’s use of fossil fuels (which the IEA is clearly on board with, listen e.g. 30:00), then adopting a low-carbon emission policy (cap and trade, carbon taxes etc....) seems to only makes sense if you also believe that there can and will be an ever-greater production and use of the fossil fuels. Therefore to admit that total global oil and gas production has already, or will soon hit its peak and then decline, might undercut the rationale for adopting such low-carbon emission policies.

p.s.,

Another interesting comment, at 16:00-23:00, perhaps explains the reason for their anticipation of a large boom in the LNG (the yellow portion of the "oil production forecast" shown in your article) is that the IEA seems to believe that the boom in shale gas will revolutionize the LNG market because the USA will not be importing LNG and may even export LNG. That is, a large portion of energy will derive from a glut of LNG in the future.

npwebb: I believe the graph was published as the IEA 2008 reference senario, and so is probably based on data from 2007 or early 2008 at the latest. Chris just drew a vertical line showing where we are presently on this plot. It would been interesting to know how much the just-published 2009 senario differs.

So, if you believe that global warming is due to man’s use of fossil fuels (which the IEA is clearly on board with, listen e.g. 30:00), then adopting a low-carbon emission policy (cap and trade, carbon taxes etc....) seems to only makes sense if you also believe that there can and will be an ever-greater production and use of the fossil fuels. Therefore to admit that total global oil and gas production has already, or will soon hit its peak and then decline, might undercut the rationale for adopting such low-carbon emission policies.

But that doesn't make sense... Admitting that we are at peak oil would bring a further incentive to change. People right now are like "wow, climate change, gotta do something", but whether they actually do something or not, they do not get the impression that it will actually affect their lives. We're talking 50+ years before big changes become apparent on a day-to-day urban life.. Peak oil would mean something totally different. It would mean higher prices for everything and less jobs in fields that do not directly contribute to energy production, and even there...

The way I see is that the IEA, and everybody involved in this scam, capitalize on climate change to try to get people to change, but without the spooky aura of something like peak oil..

In any case, the fact that is starting to come out in the media is a good thing in my opinion. They have to stop lying to us. People need to know that we are at peak oil and what that means.

In the discussion that followed it was revealed that the USA was applying pressure.

I had earlier heard the same thing from another officer from Norway who, at the time he spoke of the pressure being applied by the USA, was working for the IEA.

We need to investigate and publish exactly *WHO* in the US was applying the "pressure" noted above. We need names, dates, job titles, locations, etc. We need to know where these individuals fit within their organizational charts - to whom were they reporting, who were they contacting in other lines of business, etc. This will begin to expose the agents involved in a possible Peak Oil coverup by elected officials, their bureaucracy as well as corporate managers and officials. We need to know who to trust and support, and who to impeach and prosecute for gross crimes against humanity, including willfull criminal negligence in this matter.

The DOE suppression of Robert Hirsch's 2005 Report "Peaking of World Oil Production: Impacts, Mitigation, and Risk Management" is another well known example of an organized coverup.

We should recognize and give thanks to people who have tried to speak up about this vitally important subject, such as Maryland Congressman Rosco Bartlett, Ken Deffeyss, Tom Whipple, Collin Campbell, Richard Heinburg, Jim Kunstler, Investment Banker Matthew Simmons, Chris Martenson, and many others. Personally I'd like to see Matt Simmons, or someone of this calibre, run for the US Presidency.

I don't mean to say that we will soon have no water and sewer. I'm not that apocalyptic. Composting toilets and wells are a good plan B though. What I do mean to say is that I believe in the near future much, if not all of our resources will go toward meeting the necessities of life, leaving little for what is known as "consumer discretionary spending". Basic sanitation is a good example. Gradually, the resources required for sanitation, shelter, warmth, adequate calories, medical care and basic transportation will crowd out those activities and expenditures that are not essential. Think of all the things that we buy that are not essential - big screen tv's, sports tickets, a night out at a resturant, car mats, etc. All these consumer discretionary items and associated companies will have a harder and harder time making a profit. Frugality will be the new buzzword for consumers. "Wear it out, fix it up, make do or do without" to quote an old Depression-era saying.

Spinone, I believe from my experience in water and wastewater engineering these systems are what have helped make possible exponential population growth and density of population and these systems were built with cheap energy and are dependent on energy to operate and maintain. Communities often depend on State and Federal funding assistance for improvements projects, which ultimately means more Federal Debt. Water and sewer rates will have to go up to reflect the true costs of these services, as energy costs rise and grant funds dry up (or become worth less due to "printing").

Here in the Los Angeles metropolitan area we have had about 5-6 major water main breaks in the past month. They have all gotten fixed in a day or two of the break but it is an indication of the fragility of the old infrastructure. As budgets become smaller and repair items become more expensive I expect downtime to increase as breaks become more frequent.

The US has a glut of natgas with historic amounts in storage and hundreds of wells that have been drilled but not completed. Shale gas is not expensive, in fact the finding and development costs are below 3 dollars. Consider the SEC filings and conference data from the big shale players, CHK, HK, DVN, and others.

The OECD has more oil in storage than average (61 days to cover vs the usual 55) and in the US, production rose year over year. ttp://tinyurl.com/ykrrqlz Demand is down in the OECD and is not projected to grow next year. That is a big clue as to the real status of recovery. The Saudis have 5-6 million barrels per day of spare capacity. Iraq has untapped reserves.

So whatever you think about the IEA "leak" or peak oil, for the next year or so we have plenty of oil and natgas and that will slow the perceived need for changes and therefore will slow any action for the near term. It also dulls the impact of whistleblower revelations. Who cares about decline rates if storage is full, spare capacity exists for now and we can plainly see market manipulation by the same international players (GS, MS, JPM) that created the last bubble and implosion? The failure by both political parties to control massive manipulation doesn't inspire much hope that there will be a coherent energy policy forthcoming or that we will get undistorted price discovery.

Ordinarily, I refrain from responding to posts by people who cannot spell nonsense correctly. However, this once I suggest that you actually read my post and the linked posts contained within. Then read a couple of news items linked below. Do some research of your own and post it, after running it through a spell checker.

I feel honored that you cut and paste my entry from the oildrum, but you should mention to the public that it is not from you. I suggest you do your own research in the future. And you got the last sentence wrong. I meant not KSA, but instead Iraq.

I feel honored that you cut and paste my entry from the oildrum, but you should mention to the public that it is not from you. I suggest you do your own research in the future. And you got the last sentence wrong. I meant not KSA, but instead Iraq.

Oilwatcher

Hi Oilwatcher, I am really interested in what's coming out of this thread, but I cannot make heads or tails of the context in which you made your comment...... a lot to do with the fact (I think?) that replies to posts no longer appear under that post. Very confusing (at least fo this old fart!)

I think it become generally agreed that what information comes out of saudi aribia is not to be trusted. I doubt Ghawar is immune to the same physics as the north sea or cantarell, younger fields seeing massive declines.

But that doesn't make sense... Admitting that we are at peak oil would bring a further incentive to change. People right now are like "wow, climate change, gotta do something", but whether they actually do something or not, they do not get the impression that it will actually affect their lives. We're talking 50+ years before big changes become apparent on a day-to-day urban life.. Peak oil would mean something totally different. It would mean higher prices for everything and less jobs in fields that do not directly contribute to energy production, and even there..

guardia, I tend to agree that it doesn’t make great sense, but still, if you listen to the press conference that is what that appear to be saying.

Perhaps it makes “political” sense, because the IEA’s funding source (OECD member governments) will support low-carbon emission policies driven by concerns about climate change, but not driven by concerns about peak oil because there is more of a consensus agreement (at least among funding bodies) toward the former than the latter.

Or, the IEA understands that peak oil is here now, but they are so locked into the paradigm of preventing man-made climate change that they simply can’t see how much stronger the peak oil argument might be. That is, if peak energy from fossil fuels is here now or very close, where would the man-made carbon, thought to causes dramatic changes in climate in the future, come from? I and probably no one, has any idea if this would mitigate climate change or not, but to me it seems to under-cut the underlying rationale for the actions being proposed by the EIA and IPCC (see e.g., http://www.onlineopinion.com.au/view.asp?article=5933).

Or, the IEA understands that peak oil is here now, but they really are concerned that wide-spread acceptance of peak-oil by governments would cause international exports of oil to decrease, as those counties that have excess oil production would hold on to their oil it for their own use. This would be back to the “prevent panic argument,” I suppose, but perhaps the IEA feels that the safer way to get government movement to a low-carbon emission policy is by talking up climate change.

I don’t think that many of us are ready for the consequences of the case where the governments, businesses, and the general public were to rapidly come to accept peak-oil. For instance, something as simple as a “run on the tank” as hypothesized by Matt Simmons (http://lpscorp.com/wetv/financialcrisis/) would probably shut down transportation, and with it the food supply to cities, in a matter of weeks.

Money is a claim on useful work embodied in a commodity or service. It can be either useful work performed by human or animal muscle or inanimate work performed by a fueled machine. One can issue all the claims on useful work one wants. It can be fiat or specie currency, corporate paper, stocks, bonds, derivatives, etc. We've seen what happens when those claims on work in the form of securitized mortgages confront a shortage of real value. They themselves become worthless. Much of this current problem comes from the globalization of labor markets. What will be ever more devastating will be when these claimchecks are tendered during a diminishing supply of inanimate energy, which, by the way, is currently the source of the vast majority of useful work. That process will only get underway on the downside of Hubbert's Curve. It's looking more like the capital markets and overall stock of money will be in a shambles when that happens. This amounts to an overshoot of claims on labor just as the human population has overshot the pre-hydrocarbon carrying capacity of the earth. Our monetary systems are not prepared for the downside of Hubbert's Curve. Hubbert himself said as much. The upshot is to forget about investing and think more in terms of preservation. Assets that exist as notes will be vulnerable. Tangible assets will be the only way to preserve value. The investment paradigm is not dead yet, only mortally wounded.

Hi Oilwatcher, I am really interested in what's coming out of this thread, but I cannot make heads or tails of the context in which you made your comment...... a lot to do with the fact (I think?) that replies to posts no longer appear under that post. Very confusing (at least fo this old fart!)

I think he meant that when you copy/paste stuff from some Web site, just copy/paste the URL with it ... that's it!

Ordinarily, I refrain from responding to posts by people who cannot spell nonsense correctly. However, this once I suggest that you actually read my post and the linked posts contained within. Then read a couple of news items linked below. Do some research of your own and post it, after running it through a spell checker.

FTFA: "The kingdom - home to the world's largest proven oil reserves - recently raised its production capacity to 12.5m barrels per day following a $100bn development programme."

100 _billion_ dollars for a tiny ~5% increase in global world supply? Wow, if that doesn't mean we're close peak oil, I don't know what does... Unless JP Morgan, Goldman Sachs, etc. spend their bonuses on these guys, I don't see how they will keep that pace of development up!

(BTW, if you don't like how French speakers spell "nonsense", at least have the decency not to insult us.)

The US has a glut of natgas with historic amounts in storage and hundreds of wells that have been drilled but not completed. Shale gas is not expensive, in fact the finding and development costs are below 3 dollars. Consider the SEC filings and conference data from the big shale players, CHK, HK, DVN, and others.

The OECD has more oil in storage than average (61 days to cover vs the usual 55) and in the US, production rose year over year. ttp://tinyurl.com/ykrrqlz Demand is down in the OECD and is not projected to grow next year. That is a big clue as to the real status of recovery. The Saudis have 5-6 million barrels per day of spare capacity. Iraq has untapped reserves.

So whatever you think about the IEA "leak" or peak oil, for the next year or so we have plenty of oil and natgas and that will slow the perceived need for changes and therefore will slow any action for the near term. It also dulls the impact of whistleblower revelations. Who cares about decline rates if storage is full, spare capacity exists for now and we can plainly see market manipulation by the same international players (GS, MS, JPM) that created the last bubble and implosion? The failure by both political parties to control massive manipulation doesn't inspire much hope that there will be a coherent energy policy forthcoming or that we will get undistorted price discovery.

I haven't studied natural gas resources data as much as for oil, but even if the gas is there I haven't seen an implementable plan to tap and distribute natural gas, and to transform our transportation system to run on natural gas instead of oil, fast enough to offset the decline in oil supply rates.

The oil in storage is insignificant relative to daily usage and projected rates of decline in production. Say existing oil wells that are meeting our current consumption rate of 85M barrels per day decline by a moderate 5%/year. The 125M barrels of tanker storage you referred to would only make up for that lost production for 29 days.

I have not been presented with credible data or reports to support the Saudi's reserve claims, and they are using increasingly more expensive and energy intensive methods to extract oil currently. I would agree though that decline in demands indicates there is no real economic recovery currently.

Bottom line, the data indicates to me our energy use will be significantly different in the future, and not planning for that possibility is a risk I am not willing to assume.

In October I attended and was a speaker at the annual Association for the Study of Peak Oil and Gas in Denver, Colorado. Approximately 500 attendees watched 70 speakers present on the geology, economics, and politics of peak oil. In this two-part report I synthesize what I saw.

For readers who are not familiar with the theory, peak oil refers to the process of total world oil production reaching a peak and then declining on a global scale as occurred in net oil exporting countries, such as the U.S. until the 1970s, the UK until the year 2000, and Norway before 2001.

My own interest in the topic started in the early 1970s when I read the 1972 book on energy and resource limits, Limits to Growth. I majored in Natural Resource Studies at the University of Massachusetts in the early 1980s, and later graduated with a BS in Resource Economics. My first iTulip writing on the topic was Energy and Money in March 2006.

I presented at the ASPO conference on the outcome of inflation versus deflation debate, and participated in a panel on energy and the economy with author Kevin Phillips, Adam Robinson of RBS, and Dave Cohen of ASPO. My presentation is available to ASPO members and to iTulip Select members in Part II.

Before we discuss the controversial issues raised at the conference, we review and update the basics of the peak oil argument.

AND

We selected the following slides from his conference presentation that make the peak oil case.

Hirsch chooses to begin his train the trainer presentation with one of several unintuitive points in the peak oil argument, that oil does not deplete in a linear fashion, like units of inventory picked off a store shelf as consumers buy them. But if the trainer is speaking to a true lay audience, that observation starts us in the middle of the story.

How many readers understand where oil came from or how utterly unique and irreplaceable petroleum liquid fuels are as a transportation energy source? Very few. So we begin the story here.

Gasoline and diesel, distillates of crude oil, are unique as a liquid fuel. The amount of work a gallon of these fuels can do when by volume burned simply defies imagination. Consider the most mundane act of the automobile owner, stopping off at a gasoline station to refuel. A mere ten gallons of gasoline propels a two-ton vehicle hundreds of miles up and down hills at speed in excess of 60 miles per hour. Try pushing your car ten feet on a flat driveway and you will begin to appreciate how much work the gasoline in your tank is doing. The amount of work a liquid fuel can do by volume is referred to as its energy density. Liquid hydrogen, by comparison, has less than one third of the energy density of gasoline. That means that you need three times as much by volume to travel the same distance, assuming both the gasoline and hydrogen powered engines deliver the same number of miles per gallon.

You can pour the gasoline into your tank on a hot summer’s day or in winter when the temperature is well below zero. Crude oil can be shipped through pipes over long distances in a wide range of temperatures and climates.

Crude oil, and its distillates, is the one and only substance like this. No other liquid that humans can dig out of the ground, refine, and pour into a tank at any climate on earth even comes close. Every other liquid fuel, such as liquid hydrogen, has to be manufactured out of something else, then compressed, and if stored as a liquid kept at temperatures hundreds of degrees below zero. You cannot transport any other fuel through hundreds of miles of pipelines. Crude oil and its distillates can be piped over long distances at a wide range of naturally occurring temperatures, and stored cheaply in unpressurized tanks.

We are using up this unique and irreplaceable liquid fuel source several million times faster than it was created by nature hundreds of millions of years ago. In a little more than two human life spans can we have used up half of all of the oil that took several million human life spans to accumulate.

To compare the ancient rate of oil creation to the modern rate of oil consumption, imagine an abandoned cast iron bathtub resting in a mythical forest. In this forest crude oil drips from the trees. In fact, all of the oil from all of the oil dripping trees hanging over the tub in this magical forest drips into this single iron bathtub.

The oil drips so slowly that it takes 16 years, or five million seconds, to fill the tub.

Each second represents one year of original crude oil creation that happened through biological processes that took place over approximately 500 million years. But rather than trees dripping oil, imagine a flotilla of tiny plants matted the surface of millions of square miles of steamy primordial seas. This floating mass turned a blazing sun, unfiltered by the rich atmosphere we have today, and ocean minerals into trillions of tons of oily plant matter.

As new plants grew on the sunny side of the massive floating mat, old plants died and drifted to the bottom ocean floor. There the oil-soaked material collected and decomposed, forming in pools and crevices as large as lakes. These folded and kneaded as the continents shifted, forming underground caverns filled with oil and gas like so much buried treasure, waiting to be discovered.

The crude oil we burn today is nature’s prehistoric bio-fuel.

About one hundred years ago, humans figured out a use for the crude oil that seeped to the surface of the ground above oil reservoirs far below. We could use it in internal combustion engines to fuel machines that transport food, goods, and ourselves. But how much oil is there for us to use this way?

Our simple analogy of a rusty iron bathtub full of oil represents the whole of it, all of nature’s biofuel collected in one place. In reality crude oil hides all over the planet, like pockets of cheese in gigantic lasagna of rock and salt. But for the convenience of our analogy that displays the difference between the ancient rate of oil accumulation and consumption since the discovery of oil as a fuel for transportation 100 years ago, our mythical oil filled bathtub sits out in the open and above the ground, as easy to drain as water from a tub when you pull the drain plug.

But instead of opening the drain, to model the rate of consumption starting around 1900, drop a cannon ball through the bottom of the tub to make a gaping, gagged hole.

Half the oil that dripped into the tub in five million seconds will be half gone in one second.

It’s probably too late to prepare for peak oil, but we can at least try to salvage food production.

By George Monbiot. Published in the Guardian 16th November 2009

I don’t know when global oil supplies will start to decline. I do know that another resource has already peaked and gone into freefall: the credibility of the body that’s meant to assess them. Last week two whistleblowers from the International Energy Agency alleged that it has deliberately upgraded its estimate of the world’s oil supplies in order not to frighten the markets(1). Three days later, a paper published by researchers at Uppsala University in Sweden showed that the IEA’s forecasts must be wrong, because it assumes a rate of extraction that appears to be impossible(2). The agency’s assessment of the state of global oil supplies is beginning to look as reliable as Mr Greenspan’s blandishments about the health of the financial markets.

If the whistleblowers are right, we should be stockpiling ammunition. If we are taken by surprise; if we have failed to replace oil before the supply peaks then crashes, the global economy is stuffed. But nothing the whistleblowers said has scared me as much as the conversation I had last week with a Pembrokeshire farmer.

Wyn Evans, who runs a mixed farm of 170 acres, has been trying to reduce his dependency on fossil fuels since 1977. He has installed an anaerobic digester, a wind turbine, solar panels and a ground-sourced heat pump. He has sought wherever possible to replace diesel with his own electricity. Instead of using his tractor to spread slurry, he pumps it from the digester onto nearby fields. He’s replaced his tractor-driven irrigation system with an electric one, and set up a new system for drying hay indoors, which means he has to turn it in the field only once. Whatever else he does is likely to produce smaller savings. But these innovations have reduced his use of diesel by only around 25%.

According to farm scientists at Cornell University, cultivating one hectare of maize in the United States requires 40 litres of petrol and 75 litres of diesel(3). The amazing productivity of modern farm labour has been purchased at the cost of a dependency on oil. Unless farmers can change the way it’s grown, a permanent oil shock would price food out of the mouths of many of the world’s people. Any responsible government would be asking urgent questions about how long we have got.

Instead, most of them delegate this job to the International Energy Agency. I’ve been bellyaching about the British government’s refusal to make contingency plans for the possibility that oil might peak by 2020 for the past two years(4,5), and I’m beginning to feel like a madman with a sandwich board. Perhaps I am, but how lucky do you feel? The new World Energy Outlook published by the IEA last week expects the global demand for oil to rise from 85m barrels a day in 2008 to 105m in 2030(6). Oil production will rise to 103m barrels, it says, and biofuels will make up the shortfall(7). If we want the oil, it will materialise.

The agency does caution that conventional oil is likely to “approach a plateau” towards the end of this period(8), but there’s no hint of the graver warning that the IEA’s chief economist issued when I interviewed him last year: “we still expect that it will come around 2020 to a plateau … I think time is not on our side here.”(9) Almost every year the agency has been forced to downgrade its forecast for the daily supply of oil in 2030: from 123m barrels in 2004, to 120m in 2005, 116m in 2007, 106m in 2008 and 103m this year. But according to one of the whistleblowers, “even today’s number is much higher than can be justified and the IEA knows this.”(10)

The Uppsala report, published in the journal Energy Policy, anticipates that maximum global production of all kinds of oil in 2030 will be 76m barrels per day. Analysing the IEA’s figures, it finds that to meet its forecasts for supply, the world’s new and undiscovered oil fields would have to be developed at a rate “never before seen in history.”(11) As many of them are in politically or physically difficult places, and as capital is short, this looks impossible. Assessing existing fields, the likely rate of discovery and the use of new techniques for extraction, the researchers find that “the peak of world oil production is probably occurring now.”

Are they right? Who knows? Last month the UK Energy Research Centre published a massive review of all the available evidence on global oil supplies(12). It found that the date of peak oil will be determined not by the total size of the global resource but by the rate at which it can be exploited. New discoveries would have to be implausibly large to make a significant difference: even if a field the size of all the oil reserves ever struck in the USA were miraculously discovered, it would delay the date of peaking by only four years(13). As global discoveries peaked in the 1960s(14), a find like this doesn’t seem very likely.

Regional oil supplies have peaked when about one third of the total resource has been extracted(15): this is because the rate of production falls as the remaining oil becomes harder to shift. So the assumption in the IEA’s new report, that oil production will hold steady when the global resource has fallen “to around one-half by 2030″(16) looks unsafe. The UKERC review finds that just to keep oil supply at present levels, “more than two thirds of current crude oil production capacity may need to be replaced by 2030 … At best, this is likely to prove extremely challenging.”(17) There is, it says “a significant risk of a peak in conventional oil production before 2020.”(18) Unconventional oil won’t save us: even a crash programme to develop the Canadian tar sands could deliver only 5m barrels a day by 2030.(19)

As a report commissioned by the US Department of Energy shows, an emergency programme to replace current energy supplies or equipment to anticipate peak oil would need about 20 years to take effect(20). It seems unlikely that we have it. The world economy is probably knackered, whatever we might do now. But at least we could save farming. There are two possible options: either the mass replacement of farm machinery or the development of new farming systems, which don’t need much labour or energy. There are no obvious barriers to the mass production of electric tractors and combine harvesters: the weight of the batteries and an electric vehicle’s low-end torque are both advantages for tractors. A switch to forest gardening and other forms of permaculture is trickier, especially for producing grain; but such is the scale of the creeping emergency that we can’t afford to rule anything out.

The challenge of feeding 7 or 8 billion people while oil supplies are falling is stupefying. It’ll be even greater if governments keep pretending that it isn’t going to happen.

Have you seen The Garbage Warrior - the documentary about Mike Reymolds? He is the NM architect who has created sustainable homes; one feature is that all gray water is reused within a house and black water is the only to leave a home. Individual retrofits, major ones for sure, would greatly reduce the demands upon municipal waste treatment facilities. REEP, in Waterloo, Ontario is experimenting in two houses with similar systems.

If the change comes rapidly, it seems clear that municipal systems will be inoperable at current levels, at least for awhile. Your anticipation of sanitation problems is astute.